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En-Bloc Achieved (as reported in the media)

Published January 26, 2006

Hoi Hup bags Kim Yam Mansion in $63m collective sale

By KALPANA RASHIWALA

PROPERTY developer Hoi Hup, part of Straits Construction Group, is understood to have bagged the 877-year leasehold Kim Yam Mansion, off River Valley Road, for about $63 million through a collective sale.

Windfall: Owners of Kim Yam Mansion's 40 apartments will receive more than $1.5 million each
The price works out to about $460 per square foot of potential floor area inclusive of a development charge of about $300,000.

Owners of Kim Yam Mansion's 40 apartments will receive more than $1.5 million each, or up to three times the $500,000-$600,000 the units would have fetched if they were sold individually.

This premium is one of the highest since en bloc sales began in Singapore in 1994. Sellers in most deals these days see collective premiums of about 30-50 per cent.

Jones Lang LaSalle brokered Kim Yam Mansion's sale.

The four-storey development is about 40 years old.

It has a land area of 49,080 square feet and the site is zoned for residential use with a 2.8 plot ratio (ratio of potential gross floor area to land area).

Based on its purchase price, Hoi Hup's breakeven cost for a new condo on the site will be about $670-$700 psf, say analysts.

Kim Yam Mansion is the first collective sale to benefit from a new law that took effect last month, facilitating en bloc sales of estates where the original landowner/developer retains the freehold title despite giving flat owners leases ranging from 850 to just under 999 years.

In such estates, strata titles were not issued under an old law, so the developer issued long leases instead. In the past, some of these landowners demanded hefty payments - amounting to millions of dollars - before they would consent to an en bloc sale.

This ate into proceeds for the flat owners, sometimes effectively blocking an en bloc deal.

Jones Lang LaSalle, Kim Yam's marketing agent, worked with real estate lawyer S K Phang to highlight the anomaly in the law to the authorities.

This was fixed through an amendment to the Land Titles (Strata) Act that took effect on Dec 1, under which such landowners lose all rights to the land upon an en bloc sale.

The Singapore Land Authority has said that in all, 24 sites will be affected by the rule change - but did not identify them to protect the privacy of the present unit owners.

SC Global to pay $266m for Paterson Tower

In a press release yesterday, SC Global said that its offer, made by wholly owned subsidiary Grandon Pte Ltd, for the en-bloc purchase of all 72 units at Paterson Tower, had been accepted by a majority of unit owners.

Paterson Tower was put on the market in February and its marketing consultant United Premas had indicated an asking price of $280 million. The failure to achieve this price suggests that prices for such prime redevelopment sites may have plateaued.

Prices for prime redevelopment sites had been rising steadily this year. In February, Far East Organization paid $120 million or $1,058 psf ppr for Angullia Mansion, the highest price achieved since 1997. Then, earlier this month, Hasetrale Holdings paid $138 million or $1,218 psf ppr for Eng Lok Mansions, an all-time high for a collective sale site. Both properties are within a stone's throw of Paterson Tower.

The price for Paterson Tower may not have broken any records but owners will still walk away with about double the market price for their homes. The current market price is about $1.85-1.9 million per unit.

The $266 million price tag includes the price for a 6,459 sq ft adjoining plot of state land. The combined land area is 121,006 sq ft and the plot ratio is 2.1. This will give the new development on the site a potential gross floor area of 254,112 sq ft and a building height of 24 storeys.

In line with SC Global's niche development strategy, a high-end luxury residential development will be built.

The Boulevard Residences around the corner, which was also developed by SC Global, made the headlines last year when a three-bedroom unit sold for $2,200 psf in October, a record high.

But the 20 owners of the freehold Paterson Lodge unanimously agreed on an answer. In a unique deal with a subsidiary of listed holding company Ace Dynamics, they will not be paid in cash for their units. Instead, they will get a new unit in the project that will go up on their land.

What's more, it will be slightly bigger than their old unit, on the same floor and facing the same view.

What makes the deal different from a handful of similar cases in the 1990s - like Eng Kong Green and Char Yong Gardens - is that the land on which Paterson Lodge stands will not be transferred to the developer until the new project is completed and the existing owners have received titles to their new apartments.

This is to protect the owners in case the developer goes bust.

In the meantime, the owners have given the developer power of attorney so it can proceed with the 35-unit project.

Apart from the 20 exchange units that Ace Dynamics must give the owners, it can sell the remaining 15 units.

It took the existing owners of Paterson Lodge almost two years to iron out the deal, working with Ace Dynamics, property agent Knight Frank and real estate lawyer SK Phang of Phang & Co.

'This means it is easier to replicate this collective exchange in estates with a smaller number of units, and very importantly, where owners are very comfortable with one another and cooperative. This isn't a mere financial deal where owners walk away and need not see their neighbours again.'

Ace Dynamics executive director Lim How Boon said: 'Not a single cent changed hands. And the owners get back the chance to stay in their units.'

Paterson Lodge sales committee chairman Quah Soo Gee said that the collective sale exchange allows all the owners to keep their prestigious address, besides significantly improving the value of their units.

Although three-quarters of the owners do not live in the development, they liked the deal as the rental value of the new apartments will be higher than that of the old ones they're giving up, said Mr Quah, an architect by training.

Agreeing with this, fellow sales committee member John Cunningham, who has owned his unit for about five years, described the collective exchange as an 'entrepreneurial solution' for owners who like living in the same area after they've done an en bloc sale.

'It is a nice exchange. We're getting back much nicer apartments than the units we exchanged in a nicer environment and with facilities,' said Mr Cunningham, creative director of ACTs of Life, which conducts speech, dance and arts classes and workshops.

'If I don't do an exchange, it (my apartment) is going to be sold out from under me and I won't be able to live in this area - even if I screamed all the way to the STB (Strata Titles Board). This is the better of two evils.'

This is how the deal was structured. The existing 20 units in six-storey Paterson Lodge comprise 10 apartments of 743 sq ft and 10 others of 926 sq ft. The new Paterson Lodge that Ace Dynamics will build will be a 10-storey development with 35 units ranging in size from 861 sq ft to 1,033 sq ft.

Ace Dynamics will have to pay a development charge of about $4 million for the right to enhance the use of the site by building a new project with a gross floor area (GFA) of 32,472 sq ft - about 57 per cent more than the existing GFA.

On the top floor will be three penthouses. The project will also have a swimming pool, jacuzzi, gym and BBQ pits - none of which are present at today's Paterson Lodge.

The current values of the existing apartments range from $630,000 to $800,000. The new units, assuming a price of $1,200 psf on average currently, will be worth about $1 million to $1.24 million.

Assuming prime district residential property prices escalate to $1,700 psf in two to three years, when units in the redeveloped project are handed over to the owners, the replacement units could be worth $1.5 million to $1.8 million, says Knight Frank.

'This works out to a collective exchange premium of at least 100 per cent for the owners,' said Mr Foo.

The advantage to the developer is that it does not have to fork out a large amount of money to buy the land upfront, thus saving on finance costs and cash flow.

It basically only pays for the construction cost and fees.

Lawyer SK Phang said the Paterson Lodge deal is the first collective exchange since en bloc rules were amended in late 1999 to allow collective sales without unanimous approval. 'However, for a deal like this to go through, you have to get unanimous approval, otherwise it gets messy.'

Current en bloc sale legislation provides that minority owners who object to a collective sale must be given a cash payment option. To determine the cash price, the most transparent method is to hold a tender and use the highest bid as the basis. However, the top bidder may not want to do an exchange, and may be unhappy if his bid is used only to serve as a pricing peg for another developer to do an exchange, Dr Phang explained.

Hence, collective exchanges are best in developments with a relatively small number of like-minded owners.

Ace Dynamics' Mr Lim said his company is looking at other such deals in prime areas.

Thomson en bloc sale fetches $156.3m

Published April 1, 2006

Thomson en bloc sale fetches $156.3m

By ALEXANDRA HO

THE collective sale fever continues, this time outside the downtown prime areas.

Owners of three properties in the Thomson area - Lock Cho Apartment, Comfort Mansion and a 4-storey walk-up apartment - fetched $156.3 million after they joined forces to collectively sell their properties by tender.

At that price tag, the freehold land works out to be about $344 per square foot per plot ratio (psf ppr), after factoring in the purchase price of a plot of state land next to it for about $14.8 million and half a million dollars in development charge.

The price fetched is a tad lower than the $160 million, or around $350 psf ppr, that the owners had hoped for.

Property heavyweight City Developments (CityDev) beat two other developers to win the site in a tender, said Credo Real Estate, which handled the deal.

The three developments, at Jalan Datoh and Jalan Raja Udang, currently have a total of 165 units.

They have a combined land area of about 137,479 sq ft and 40,526 sq ft of state land. With a plot ratio of 2.8, it could yield about half a million sq ft of gross floor area (GFA), with a height control of up to 36 storeys - making it one of the largest collective sale projects launched this year in terms of GFA.

Credo reckons that CityDev could break even at around $600 psf and expects around 400 condominium units, each about 1,200 sq ft.

'These three adjoining sites were extremely attractive because collectively, it will provide us with the opportunity to amalgamate the sites to create a sizable land area for redevelopment.

'Such collective en bloc opportunities are rare,' said CityDev's group general manager Chia Ngiang Hong in a statement.

Each seller stands to get between $840,000 and $1.3 million, Credo said, which is a 60 to 90 per cent premium over their current market values.

Credo's executive director Tan Hong Boon said that including this sale, the total collective sale tally for the first quarter of this year is $1.2 billion, with 17 projects sold. Mr Tan said that figure is already more than half of 2005's total of $2.26 billion.

Evan Lim & Co beats three other bidders for prime site in en bloc sale

By ALEXANDRA HO

ANOTHER prime property has gone for collective sale - for $32 million - showing that momentum is continuing to pick up in real-estate en-bloc deals.

This time, it is The Esquire, an 11-storey, 30-unit apartment block on Mount Elizabeth, near the famed hospital and behind The Paragon Shopping Centre. Its owners - both investors and owner-occupiers - had failed in earlier attempts to sell the entire block.

Evan Lim & Co, a general building contractor and property developer, beat three other bidders with its $32 million offer.

The price buys a building on a land area of about 16,067 sq ft and a gross plot ratio of 2.8.

The present structure can be replaced by a building of up to a maximum of 36 storeys.

In addition to the $32 million, a $3.59 million development charge is payable. Taking that into account, Evan Lim's purchase price is about $791 per square foot per plot ratio (psf ppr).

'This is the highest residential land rate achieved in the Mount Elizabeth/Emerald/Cairnhill location in recent years, and is the third highest in the vicinity of Orchard Road, just after the recent sales of the larger Angullia Mansion and Habitat II,' said Tan Hong Boon, executive director of Credo Real Estate, which brokered the deal.

Angullia Mansion went to Far East Organization for a land cost of $1,058 psf ppr inclusive of development charges earlier this month, while Habitat II was sold to Wheelock Properties last year for $876 psf ppr.